By Tess Ingram
The world's third-biggest gold miner has revealed it is "keeping a watchful eye" on acquisition opportunities in Australia, after remaining quiet during a recent string of deals within the flourishing gold sector.
AngloGold Ashanti Australia senior vice-president Mike Erickson said merger and acquisition activity in the Australian gold sector was a "hot topic", as the significant drop in the local currency more than offset the falling US-dollar gold price.
AngloGold Ashanti Australia senior vice-president Michael Erickson says the miner is "keeping a watchful eye" on M&A opportunities.Credit: Aaron Bunch
A strong Australian dollar gold price has allowed local miners to generate considerable cash, sparking a flurry of acquisitions in the sector in recent months. But South Africa's AngloGold, which operates the Tropicana and Sunrise Dam gold mines in Western Australia, sat on the sidelines as it sought to ease the weight of a heavy debt burden.
Mr Erickson told Fairfax Media the gold producer was now in a much stronger position to consider any deals after paying off a considerable chunk of its debt. "It is a hot topic at the present moment but we are always keeping a watchful eye," he said.
"We are certainly not looking to sell more assets. Are we prepared to buy any more? Nothing is off the table. We have really improved the balance sheet considerably in dealing with our debt."
AngloGold sold its Cripple Creek & Victor mine in Colorado for $US820 million in June. The move allowed it to pay off much of a high-yield bond to reduce its net debt 25 per cent to $2.32 billion at September 30. It also freed AngloGold up to strike a deal in September to jointly rebuild its Obuasi mine in Ghana with Randgold Resources.
Mr Erickson said he thought there would be more merger and acquisition activity in the gold space because the trend for major miners to divest assets was likely to continue. "I don't know where or what that might be but that's the cycle we are in at the moment," he said.
AngloGold is also seeking growth opportunities through exploration and has committed about $35 million to drilling near-mine targets at both Sunrise Dam and Tropicana, at a time when many other miners have shelved their exploration efforts.
During the 2016 calendar year, AngloGold plans to spend about $15 million on exploration at Sunrise Dam and about $20 million at Tropicana, a joint-venture project with Perth-based Independence Group.
It has also earmarked a further $12 million for greenfields exploration targets, predominantly in Western Australia.
After its acquisition of Sirius Resources, Independence Group now counts millionaire prospector Mark Creasy as its largest shareholder. Mr Creasy said in June he believed there was more gold to be discovered at Tropicana.